Building Costs Are Ripping. Here's Why That's Good News.

Building material costs just jumped 36% in a matter of weeks.

Fuel crisis. Middle East conflict. Supply chains buckling.

Suppliers are flagging price hikes of 5% to 50% across plumbing, PVC, concrete and steel.

Most people see that and freeze.

We see it differently.

Rising construction costs create a floor under existing property values.

If it costs $900k to build a brand new home in an area where you can buy an established house for $600k, that's not a risk. That's a pricing advantage.

And that $900k figure? It's going higher, not lower.

The supply situation is worse than the headlines suggest.

Australia is short at least 200,000 to 300,000 homes right now.

The government's target is 1.2 million new homes over five years. Current forecasts say we'll deliver 938,000. That's a 262,000 shortfall.

And that's before you add net migration of 260,000+ people per year.

Every year, the gap compounds.

Here's the part most people miss.

Clients tell us all the time: "There's heaps of farmland nearby, new supply is coming. I don't want to buy near it."

Fair concern without looking at the data. But look at the actual numbers.

Building approvals are running at about 196,000 per year. Sounds reasonable.

Building commencements? 175,000.

The target? 240,000.

We haven't hit the target once in 12 years.

Not even close. And it's getting worse, not better.

Approvals don't equal homes. Just because council stamped a subdivision doesn't mean a single slab has been poured.

Farmland on a map is not competition.

NSW, VIC, QLD, WA, SA. Same story everywhere.

Approvals get stamped. Slabs don't get poured.

Three things matter right now:

Price. Are you buying under replacement cost? If the fully loaded build cost is $900k and you're paying $600k for an established home in the same area, the value equation is obvious. Nobody rational builds new at that premium when the alternative is sitting right there.

Yield. Strong cashflow or don't bother. You need to be able to hold long term without it burdening the family budget.

Building starts vs approvals. This is the real metric. Not what's been approved. What's actually being built. And right now, starts are well below where they need to be.

We're not just saying this. We're doing it.

Both AJ and I just personally purchased apartment blocks.

We wouldn't tell you to buy property if we weren't buying ourselves.

Uncertainty creates opportunity. Pre-COVID taught us that. Same playbook. Different headline.

A word on the risks.

It's not all upside. Interest rates will likely sit around 7% by year end. Serviceability buffers are tight. Media sentiment will get louder before it gets quieter.

This is not a "buy anything, anywhere" market.

This is the best window for those who have genuine buffers, confidence in their income, and the discipline to ride out 12 months of noise.

If that's you, the opportunity is real. If it's not, now is the time to get your position right so you're ready when it is.